Friday, October 28, 2011

AUD/HKD FX contract closed out at a profit

The AUD/HKD FX contract I opened late last month was closed out this week. As the contract was out of the money, I pocketed the premium for a total return of 2.02%. While this is many multiples of what I could have earned on a bank deposit over a month, it is less than half what I would have earned had I simply brought and sold the AUD over the same time period and a small fraction of the return that would have been generated by buying Hong Kong equities.

While it is not always the case the lower risk equates to lower return, this time it did.